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45 terms

Econo 7

STUDY
PLAY
supply
Amount of goods and services availabble
*What a is willing to produce depending upon his costs,demand,and potential profits
law of supply
Producer will produce make of product for a higher price/profit than they will when price/profit for their product falls
supply schedule
Tabular recording of the number of units of a good or service supplied at various prices by producers
supply curve
Graphic representation of the supply schedule
*Reflects how higher and lower prices have an effect on the supply of a good or service
market price
point at which goods and services are exchanged for money
equilibrium
point at which the amount of a product demanded by consumers equals the amount supplied by producer
*All wants for a good or service by consumers are satisfied at equilibrium
*market price at equilibrium is where producer makes his greatest profit
surplus
economic condition that occurs when producers supply more of a good (or service) than is demanded by consumers
*(A surplus drives price down)
shortage
economic condition that occurs when consumers demand more of a good (or service)
*(shortage drives prices up)
capacity
number of units of a product a factory can produce given its size,type of machinery, and number of workers
mechanization
substitution of capital goods (machines) for labor in the product in process
input
any resource that is used in the production process
productivity
a ratio of the amount of output per unit of input
*measure of how efficiently people work
*usually measured in "output per worker per hour"
technology
body of knowledge,skills,and where with - all that comprises the processes used in production
*application of science to industry,agriculture, and commerce which increases productivity and efficiency
research and development
company programs designed to produce new or improved products and to reduce production costs
economics of scale
reduction of production costs per unit as plant size increases (up to a point)
*savings that come from mass production
diminishing returns
stage of production where additional inputs produce successively smaller units of output
fixed costs
Constant costs which dont change with increases or decreases in production
*Also called "overhead"
variable costs
production costs that vary with changes in the quantity of output and increases or decreases in business
total costs
The sum of fixed costs and variable costs
*TC=FC+VC
demand
wants of a consumer at a particular time for a good or service
law of demand
All else being equal more items of any good or service will be sold at lower price than a higher price
*As the price of a good falls a larger quantity will be brought
*If price of good goes up, less of it will be sold
demand schedule
Tabular recording of the number of units of a good or service purchased at various prices
demand schedule ex
After wilson high school won the state 3-A (cost-$5.00/order 100t-shirts)
demand curve
Graphic representation of the demand schedule
*Illustrates how higher and lower prices after the demand for a good or service
price
money value of a good or service
*unit by which we measure relative scarcity
*determined by the interaction of demand and supply
elasticity
shows how much a change in price affects the quantity demanded
elastic (demand)
demand condition where %change in quantity demand for a good or service is more than the % change in price
*ER>1
*small change in price will have a relatively large change on quantity dmanded for a good or service
inelastic
demand condition where the % change in quantity demanded for a good or service is less than the % change in price
*ER<1
*Change in price will have a relatively small affect on the quantity demanded for a good or service
Unitary elastic (demand)
demand condition where the % change in quantity demanded for a good or service is less than the % change in price
*ER=1
*Illustrated by a 45 degree line on an economic demand model
perfectly elastic
demand condition where the change in quantity demanded varies from zero to infinity whenever there is a change in price
*Illustrated by a vertical line on an economic demand model
perfectly inelastic (demand)
demand condition where there is absolutely no change in the quantity demanded for a good or service with a change in price
*Illsturated by a vertical line on an economic demand model
utility
usefulness of a good or service
*Amount of satisfaction one gets from a good or service
diminishing marginal utility
point where the last item consumed will be less satisfying than the one before
*seeing a movie for a second or third time,last slice of pizza after hunger is gone,second soft drink after one's thirst has been satisfied etc.
*real income- amount of goods and services a person can purchase with his income
average costs
Total costs divided by the number of units of a good or service produced
*TC/#units=AC
revenue
money received from sales
*money taken in by a business or government
total revenue
sum of recipts from all units of a good (or service) sold in a given time period(day,week,month,quater,year)
*TR=PxQ
break-even profit
point where total revenue equals total cost
*TR=TC
profit
economic condition that occurs when total revenue is greater than total cost
*TR>TC
loss
economic condition that occurs when total revenue is less than total cost
*TR<TC or TC>TR
marginal revenue
The addition to total revenue from the sale of an extra unit of output
marginal cost
the addition to total cost from the production of an extra unit of output
maximum profit level
point reached when marginal revenue equals marginal cost
*MR=MC
short run
production period which is insufficient to adjust or change some factor inputs
long run
production period which is of sufficient length so all factor inputs can be adjusted or changed
business cycle
Periodic phases of change and fluctuation in an industrial economy which depicts business expansion and contraction
*(business cycle model reflects economic expansions,peaks,contractions,and troughs)